Gus Cosio says so

Ideas on the Philippine Stock Market

Friday opening notes – chupita!

9:25 Friday  11 December 2009 ( pre-opening)

When I looked at some of my charts this morning, I noticed that a lot of the large cap blue chip stocks were way oversold.  There are at least 4 stocks that I think are extremely oversold and worth buying.  GLO at below 900 is a very safe bet.  ALI which is always expensive is a property bell weather stock so it is more of a direction setting play if you think that the real estate market will continue to be buoyant; it should not get much lower than this.  MBT has been sold down since a large american investment house called a buy on it; it is still trading around 9.3X 2010 earnings which is not bad.  Then there is AC which was also being sold down by foreign houses despite its unchanged fundamentals; it is trading just below its pre-Lehman levels and way below its 2008 highs.  There is also BPI which has pretty narrow volatility but is trading at the lower end of its 2 peso trading range.

The stocks I think that one should avoid are FPH, FGEN, EDC and FLI.  I think that these stocks are currently vulnerable to sell offs.  Generally, this market will trade thin so these trading ideas are for those who can be nimble in their trades.  Of course some of the smaller stocks which are also oversold – SPH, PNB, AGI – could see a bounce.  It may just be a good time for coffee money trades; in local parlance – chupita.

PSEi closed at 3031.13 today (4:00pm Friday 11 December 2009), up 24.56 points or +0.82%

Market was relatively thin today but true to expectations, we saw a minor recovery in GLO, ALI, MBT, AC and even BPI.  It looks to me that we’ll still have some year end accumulation of these stocks including TEL and possibly even MER.  Notice how FGEN tanked even further today ( it was 16.50 at the beginning of the week and closed 14.75) and to my surprise EDC and FPH showed some recovery.  Even PNB and AGI exhibited some late buying with good volume particularly with AGI which even made it to the most active list.  PIP ended on a high note with a volume spike but I think one should take profits on this stock soon for technical reasons.

Anyway, I think the week ended on a positive tone which should encourage investors to accumulate more stocks with positive outlook for the year end.  I continue to point out PNB which I hear is moving closer to the merger with Allied.  I am quite patient on the stock because I see at least 30% upside in six months.

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December 11, 2009 - Posted by | Financial markets in Asia

3 Comments »

  1. hi sir gus, what’s your view on MWC and MPI? the former has been trading in the range of 16 but it closed at 15.50 today.

    Comment by J | December 11, 2009 | Reply

    • Hi Jon,
      On MWC, I like this stock. It has very strong earnings. It is a very defensive stock meaning even if the market goes down, this will not go down as much reason being that it has very strong and regular cash flows by virtue of its being a water utility. Having said that, it is not a very exciting stock because it will likely not have volatility. It will always perform in line with the broad market on the upside.
      MPI is a lot more exciting because it is expected to be volatile in the next few years. It owns Maynilad which is also a water utility but there are other plays inside this holding company stock, namely, its holdings in MER, Manila North Tollways, PX and who knows what else because they will probably be acquiring a few more infrastructure ventures.
      Bottom line, if you want a conservative portfolio, put more weight in MWC. If you want something aggressive, put more weight in MPI.

      Comment by Gus Cosio | December 14, 2009 | Reply

      • Thank you Sir!

        Comment by J | December 14, 2009


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